How the F-Series Boosted Ford’s Q4 2018 Results



Ford’s fourth-quarter North American performance

In the previous article, we discussed how Ford Motor Company’s (F) solid performance in North America, which was driven by a positive mix and higher net pricing, helped it boost its automotive revenue.

In the last few years, US demand for pickup trucks and utility vehicles has surged significantly. This higher demand for trucks has helped auto companies (IYK) such as Ford, General Motors (GM), Fiat Chrysler Automobiles (FCAU), and Toyota Motor (TM) protect their profit margins. Pickup trucks and utility vehicles tend to yield higher profit margins than passenger cars for auto companies.

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In the pickup truck segment, Ford is the market leader with its F-Series pickup truck line-up, which has ruled the US market for over four decades. Other mainstream auto giants General Motors, Fiat Chrysler, and Toyota compete with Ford in the US pickup truck space. GM’s Chevrolet Silverado, Fiat Chrysler’s Ram, and Toyota’s Tundra are other popular trucks in the US market.

F-Series boosts fourth-quarter earnings

In the fourth quarter, Ford’s EBIT from North America was $2.0 billion, up 11.1% YoY. With this, Ford’s EBIT margin in the region improved to 7.6% in the fourth quarter from 7.3% a year ago.

In 2018, the demand for F-Series trucks, including the King Ranch, Lariat, Platinum, and Limited Super Duty trucks, remained strong. Last year, F-Series US sales totaled 909,330 units, up 1.4% YoY, while the company sold over 1 million units of its F-Series across the world.

In its fourth-quarter earnings report, Ford highlighted that the ATP (average transaction price) of the F-Series was ~$2,000 higher per unit than the segment average. This increase in ATP helped the company boost its North American revenue and EBIT in 2018—including in the fourth quarter.

Ford’s other trucks, vans, and utility vehicles also contributed positively to its fourth-quarter revenue and profitability in North America.

Amid Ford’s deteriorating sales performance in the majority of markets, the continued strength in its F-Series sales was a big relief for the company and its investors.


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